Daily Brief: Coca-Cola’s Taken Over This World, So It’s Moving On To The Virtual One

Daily Brief: Coca-Cola’s Taken Over This World, So It’s Moving On To The Virtual One

almost 2 years ago3 mins

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Coca-Cola posted its highest quarterly revenue and profit since 2016 on Monday, and the drinks maker has already found its next untapped market: dead-eyed avatars.

What does this mean?

You’ve got to hand it to Coke: the rising cost of its drinks didn’t put loyal customers off last quarter, but the company still went out of its way to cater to an inflation-hobbled market. It released smaller bottles at more affordable prices (which, less altruistically, probably had higher profit margins), and subsequently sold 8% more products last quarter than the same time last year. That helped push up the company’s organic revenue – which strips out the effects of currency swings and acquisitions – by a better-than-expected 18%. And even though it announced that suspending operations in Russia – one of its fastest growing markets – would bruise growth, the company stuck with its full-year revenue target for 2022.

Coke sales

Why should I care?

The bigger picture: Consumer staples aren’t invincible.

Coke’s results aren’t exactly surprising: it’s a consumer staples company that sells products people tend to buy no matter what. But Coke acknowledged that there’s only so far that it can put its prices up before customers put the bottle down, while admitting that even higher costs – of sugar, aluminum, and more – were on the way. Fellow staple Kellogg’s said similar things earlier this year, suggesting the typically recession-proof sector could eventually see profits melt away like yesterday’s soggy cornflakes.

Coke stock
Source: Google Finance

Zooming out: Epic marketing, n00bs.

It’s good to know that if you’re ever feeling virtually parched, you can just slake your virtual thirst with a refreshing virtual Coke: the company announced earlier this month that it would be launching a new drink in the metaverse. But not to worry if you’re one of the dweebs still hanging out in the real world: you could get your hands on the super-limited edition “pixel-flavored” drink when it launches next month.

Keep reading for our next story...

Global Military Spending Hit A Record High Last Year

Military spending image

Data out over the weekend showed that global military spending hit a record high last year, so… war, huh. That’s what it’s good for.

What does this mean?

Military spending has been on the rise ever since Russia invaded Crimea in 2014, pushing countries – European countries in particular – to start amping up their militaries. And data from the Stockholm International Peace Research Institute (SIPRI) just revealed that this spending reached a new high last year, when the world spent an inflation-adjusted 0.7% more on defense than the year before. That brought the yearly total global spend to $2.1 trillion – a number the SIPRI expects to accelerate following the Ukrainian invasion. Certainly looks like it: a host of European countries have already pledged to spend more on their militaries, with Germany already launching a $110 billion fund earlier this year to do just that.

Military spending
Source: SIPRI

Why should I care?

For markets: Make war, not love.

All that extra military spending is ideal for defense companies, which are signing new contracts left, right, and center. Take MBDA: the European missile-maker posted record results in 2021, and said last week that this year’s orders are off to a strong start. Investors’ missiles are showing too: a global index tracking aerospace and defense stocks has outperformed an index of global stocks by 17% this year – the most in almost a decade.

Defense stocks

The bigger picture: Realism versus pacificism.

Conscientious investors have been shunning the defense sector for a while now, for obvious reasons. But some analysts think the Ukrainian war – which has laid bare the occasional need to swap pacifist ideals for military intervention – could change the way they think about it. And we’re starting to see signs of exactly that, with Sweden’s SEB Investment Management abandoning its weapons-snubbing principles and allowing some of its funds to invest in the sector this month.

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